laissez-intérêt: From GATT to Bali

There are two famous logics regarding politics and economics- “All politics is local” and “All economics is international”. The strain between two logics has been persistent for years. Liberal economists forcefully argue that free trade among nations leads to positive sum (win-win) for all countries when based on the principle of comparative advantage, a theory formulated by David Ricardo in 1817. But can every country enjoy this kind of ‘outstanding’ situation? Opening up the market of a poor country along with a big economy cannot come up with equal turn out. The child industries of poor countries can be wiped out with the influx of cheap products from import, for example, the ‘policy of dumping’ can easily hasten this. Free market economy nipped the child industries in their buds which results in massive unemployment and ends with political backlash at decisive stage. Therefore, developments that are continuously taking place every day from global to local levels make us confused about which logic in fact, dominates at the end of the day. This article will try to explore the answer in a nutshell, with the given recent international developments regarding regulations of international trade by WTO and its last ministerial meeting held in Bali, Indonesia. 

Though GATT was established to ensure triumphal march of free market economy, later the term was created laissez-faire but could not get success as much as it was anticipated. Patrick Cronin, professor at international studies, AGSIM has very insightful comments, “Standing in a stark contrast to the liberal logic of trade is that international economic transactions take place in a world of nation state. With no supranational authority to dictate trade rules, much less enforce them, state trade policies are driven primarily by domestic concerns.” But still nation states based international system hastened a situation of creating a supranational body like General Agreement on Tariffs and Trade (GATT) in 1947 with a hope that it would actualize the dream of David Ricardo and ‘perpetual (economic) peace’. ‘GATT was created to facilitate a movement toward global free trade, its negotiation principles included the concept of reciprocity. No country was expected to offer unilateral concession. As a result, within the GATT the liberal goal of free trade has been pursued through this mercantilist negotiation process.’ So, it is obvious that laissez-faire could not function as the actual mantra behind the formation of GATT. Then what was the real motive? We need to take into consideration the situation of world politics of 1950s and 60s to find out the answer. ‘It is important to note that liberalization efforts were facilitated by the willingness of the US to play a leading role in pushing the liberalization process forward. Freer trade was part of a larger geo-political strategy to help rebuild the US’s Cold War allies Japan and Western Europe.’ That’s why I think rather laissez-intérêt or ‘let interest do’ worked as a genuine driving force behind the formation of GATT. Following discussion will make it more apparent.

It is widely said that ‘GATT was the victim of its own success.’ Its minimum success with limited regulatory mechanisms adjoined it to the further complexities. Over time, Issues like Voluntary Export Restrictions (VERs), Non-Tariff Barriers (NTBs), Dispute Settlement Mechanism (DSM), emergence of necessity of Intellectual Property Rights (IPRs) started to come forth and open up the ineffectiveness of GATT as an obsolete institution to go anymore with demand of time. Along with them, increase of members in GATT with the newly independent states from Afro-Asia, due to break of European colonial rule in those continents in 1960s and 70s placed GATT in more challenging situations. ‘By the early 1980s, it was increasingly clear that the GATT’s rules would need to expend to include not only these new forms of protectionism but also a growing list of other trade related issues.’ Agriculture topped the list since majority of the members of the GATT were agriculture based economy countries. At that time GATT’s most significantly important round, among eight, the Uruguay Round was initiated to resolve all those issues. Among those issues agriculture, free trade and IPRs were important for Least Developed Countries (LDCs) for their economic development.

Since agriculture is the most relevant issue I shall try to explore here in abridged. The issue of agricultural sector trade was effectively excluded from the GATT at an early stage of the agreement’s life.  It was not until the opening of the Uruguay Round in 1986, however, that agriculture was placed finally on the negotiating agenda. The agricultural negotiations in the Uruguay Round were by no means easy. The broad scopes of the negotiations and their political sensitivity necessarily required much time in order to reach an agreement on the new rules. The only conditions were that agricultural export subsidies on industrial products were prohibited.  Agricultural export subsidies should not be used to capture more than an “equitable share” of world exports of the product concerned. The GATT also allowed countries to resort to import restrictions (e.g. Import quotas) under certain conditions, notably when these restrictions were necessary to enforce measuring domestic production. Some net exporting countries, such as the USA, sought to maintain their market share by resorting to export subsidy programs, whilst those exporters that were unable or unwilling to do this, saw their market shares decline further. International tension and disputes over agricultural trade arose with increasing frequency, and GATT institutions were often used in an attempt to resolve these disputes. In fact, 60 percent of all trade disputes submitted to the GATT dispute settlement process between 1980 and 1990 were concerned with agriculture.

The agriculture agreement negotiation was hindered by several interest blocks e.g. Cairns Group, a group of nineteen agricultural countries from Latin America, Africa, and the Asia-Pacific region, Quad countries include the USA, Canada, Japan and the EU are mention worthy. Within the EU, the region’s support for agriculture and its protectionist stance reflects the strong influence of countries like France. Any concession here requires tough intra EU bargaining. On the other hand, the USA stands sometimes besides Cairn Group but other time against it. All stands are dictated by the intérêt of either the domestic politics or by the economy of the respective countries. In 1996 the USA executed some agricultural reforms like stepping toward the reduction of supporting farmers in various forms were boomeranged by political resentment. Later it had to alter its policy to appease the situation.

Was there any significant development of agriculture agreement in the last ministerial meeting of Doha Round in Bali? Critiques have weighed on achievements rather than failures. This year ministerial conference resolutions are taken the biggest success in more than last a decade and a rejuvenation of WTO as well. Bali took a major decision on duty free, quota free access of goods of LDCs to the developed countries which will especially be applicable for the USA. Another important decision was about the trade facilitation will simplify customs procedures by reducing costs and improving their speed and efficiency in future. But the Cuba won’t be able to get the benefits from major WTO decisions. Cuba still suffers from USA’s trade embargo continued for last fifty years which eventually deprives it from getting maximum benefits of WTO trade agreements.

Agreement on agricultural subsidies could not see lights due to opposition from India. India’s stubborn stand will make suffered many LDCs when benefitted others varying at different levels. Doha Round aimed for ‘fair and market-oriented agricultural trading system’ which was anticipated to be implemented in this year ‘conference.  This was to be achieved by the way of substantial reduction in trade distorting domestic support for agricultural commodities, improvements in market access for agricultural goods and reduction in export subsidies. Some export oriented LDCs want to abstain developed countries from subsidizing their agricultural exports but subsidizing their own. India told it will continue to subsidize its agriculture to save small farmers and ensure food security. If India decides to stop exporting to secure its own food security then it will cause for concerns for many countries like its neighboring Bangladesh, Nepal, and Bhutan and so forth. There will some reliefs for developing countries since Bali declared that developing countries will not be challenged legally even if the limit to trade distorting domestic support by a country exceeds ten percents.


Now let us come to conclusive remarks in this discussion. Why WTO could not achieve its optimum success? Sometimes it was due to clash of interest and sometimes it was game of politics which made it an inept institution. Now let us back to the point of two logics. Which logic dominates in respect of WTO performance? I think none of those. Since we have experienced that domestic politics can dictate international trade resolutions and international economic resolutions can break domestic status-quo. None of these can be thought desolately rather they are interlinked and complementary to each other. Above both of those logics, I think one mantra dominates everything; everything from politics to economics at local to international levels. And it is none but the mantra of laissez-intérêt!

This article will be available in the upcoming issue of Foreign Affairs Insights & Reviews (www.fairbd.net)

Military Dynamics in Egypt Crisis

Since Mursi was the first ever elected president of Egypt the Egyptians very plainly, expected that it will bring a positive change to their lives. They were supposed to have freedom of expression and so other democratic rights. But on 22 November 2012 Mr. Mursi put a presidential decree that could not be appealed, a power not even Mubarak had. That decree gave him a supreme power above any any person. He was forced to rescind the decree a few weeks later. Although the move unquestionably smells of authoritarianism and has been universally criticized, it can be argued that, to some degree, Mursi’s seemingly undemocratic move was triggered by a series of actions by the courts that undermined his legitimate powers. There had been some salient features of Mursi’s misrule. Those include- the use of violence and even torture against protestors by MB supporters during riots in front of Mursi’s palace on December 2012; Massive media censorship; Investigation for high treason, claimed by the government, of several leaders of the opposition. MB owned media have also spread accusations that opposition leaders like Amr Moussa spy for Israel and are part of a US-orchestrated plot to overthrow the government. Mursi’s blatant intention to consolidate power in an authoritarian manner took him into the ditch of hell.

The politics of Egypt is based on republicanism, with a semi-presidential system of government. Like many other modern states there are three branches of state in Egypt- legislative, executive and judiciary. But military wing, Supreme Council of the Armed Forces (SCAF), is the most powerful above all of them. Military officers in fact, have been ruling the country since 1952 by toppling monarchic system. Following the Egyptian Revolution in 2011 it was widely expected that there would be breakthrough.  The revolution was initially successful since it forced President Hosni Mubarak to resign but could not free Egypt from the clutches of the SCAF. This time SCAF grabbed executive power with popular support. It dissolved the parliament and suspended the constitution. This situation sustained until Mursi assumed to power in 2012 through an election.  But Mursi, the first ever democratically elected president of Egypt could not stay more than a year. This time Fattah Al Sisi the Commander-in-Chief of the Egyptian Armed Forces produced a successful coup to overthrow Mursi amidst a longstanding political crisis including fierce street battle with pro-Mursi supporters on one side and anti-Morsi on the other.

Hillel Frisch assumes that the unique role of the military in Egypt is even more disconcerting. In Egypt, the armed forces have assumed, contrary to the existing constitution, a guardian role, similar to the Turkish model before the ascendance of the government Justice and Development Party in which the army does not only protect the state against outside competitors but maintains the regime internally as well.

In history it is found that since Colonel Gamal Abd-al Nasser’s absolute rise to power in the mid- 1950s, the Egyptian armed forces have neither ruled nor played the role of the guardian of the Egyptian regime. Under Mubarak the army was privileged yet subordinated. This situation had been continued until newly elected President Muhammad Morsi subordinated the Army to his rule in August 2012.

The military is very influential in Egypt's domestic affairs, politically and economically. Approximately 30% of the Egyptian economy is dominated by the military. It is also well-integrated into the political system in Egypt. However, it has given signs to indicate its support of the demands of the Egyptian people. In its statement deposing Morsi, the military denied engaging in a coup d'état, indicating that it does not intend to run the government. Rather, the military’s actions seem to reinforce what it sees as its traditional role as the “Guardian of the Republic”.

There are also indications that the MB sought to slowly replace the old military leadership with elements that, for per­sonal or ideological reasons, were more sympathetic to the movement. That reshuffle also created discontent in armed forces.

Since it is clear that the Egyptian military quarter had been enjoying a privileged life and well control over the country until Morsi entered into the scene they were looking for a continuation of their past supremacy even during the Morsi period. Eventually this section was looking for changing the status quo.  Finally internal factors i.e. political unrest and external factors i.e. green signal from a western superpower assisted them to fulfill its desire.

This article was appeared first on 23rd August, 2013 on the Daily Sun (Link- http://www.daily-sun.com/details_yes_23-08-2013_Military-dynamics-in-Egypt-crisis_593_2_5_1_1.html)

Role of Interest Groups in Egypt Politics

Egypt has become the focal point of interest of political analysts. To understand the recent political development in Egypt someone has to consider both internal and external dynamics juxtapose. Internal and external both factors are equally complex and greatly influential. 

Armed Forces

The military is very influential in Egypt's domestic affairs, politically and economically. Approximately 30% of the Egyptian economy is dominated by the military. It is also well-integrated into the political system in Egypt. However, it has given signs to indicate its support of the demands of the Egyptian people. In its statement deposing Morsi, the military denied engaging in a coup d'état, indicating that it does not intend to run the government. Rather, the military’s actions seem to reinforce what it sees as its traditional role as the “Guardian of the Republic”.

Muslim Brotherhood

The Muslim Brotherhood (MB) has its origin in Egypt. By the dint of spatial reality MB has influential role in Egypt. The organization was founded more than eighty years ago in 1928 and after so many years of prosecution by regimes it had been able to remain intact throughout the Middle East. The upspring or what came to be known as the Arab Spring that took place throughout the Middle East eliminated some of the old regimes in countries such as Tunisia, Egypt, and Libya which allowed the MB to rise to power after being a banned organization and gain the benefit of political power of these revolution which had started out as a secular movement.

One of the most prominent strategies of MB is avoiding confrontation with the military. Finding a modus vivendi with the army has been particularly challenging in Egypt, where the military has enormous power. However the MB seems to have established a relatively effective power-sharing mechanism with it, partially enshrined in the new constitution. In a nutshell, the MB does not encroach on the army’s huge financial interests, and the army lets the MB govern.

Political Parties

Egypt has a multi-party system. However, National Democratic Party (NDP) was the only active political party until 2011. Egypt movement of 2011 ousted both NDP and President Hosni Mubarak at the same time. Under Mubarak, opposition parties were allowed, but were widely considered to have no real chance of gaining power. That circumstance sustained until ‘Egyptian spring’.

On March 28, 2011, the Supreme Council of the Armed Forces introduced the Political Party Law, which eases restrictions on the legal establishment of new political parties in Egypt. Under the law new parties are now required to have at least 5,000 members from at least ten of Egypt's provinces. Originally, new parties were only required to have 1,000 members. At present there are around fifty political parties in Egypt and around forty of them were established in post Mubarak regime.

Media’s Role

Media, especially social media had an historical role to initiate and sustain the ‘Egyptian spring’ which eventually prompted the fall of Mubarak. In the Mubarak period there was no free media. According to Freedom House report 2007, the print press is very diverse in Egypt, with over 600 newspapers, journals, and magazines. However these are owned mostly or in some way by the government, the opposition or other political parties. So it was difficult for the people to get a neutral viewpoint over any political issue.

Freedom of express of media is also in a fragile state in Egypt. The scenario were so worst during Mubarak period that several journalists from private newspapers have been arrested and jailed for breaching laws that prohibited criticism of the President. There are two state owned and an increasing number of private television channels which are also under huge government surveillance. 

The most fascinating feature of media is the wide spread use of internet in Egypt. According to Freedom House report 2007 around 21 percent of the population use internet. The recent political unrests are more freely covered and expressed through internet based social media since print and TV media were forced to remain tight lipped under government threats. But the young Egyptians could never be stopped. In a latest report it is found that a group of MB activists established their own internet protocol to avoid government surveillance. They are sending what actually are happening in Egypt under army rule.  

first appeared on 14th August, 2013 on Daily Sun,